Amazon Value Chain, Coursework Example

Amazon’s global value chain is among the most successful value chains globally, with its organizational forms (Harracá, 2017, 1). The retail company has its own logistics department owned and controlled by the company and plays a central role in the company’s smooth running. The company’s business strategy is to have its value chain managed by the company ( Al-Marzooqi, 2020,1). The terms and conditions are also guaranteed when the vendors are dealt with frequently and in a short time. Whenever credit limits are to be extended, this is possible with short-term contracts. The company’s comprehensive value chain has substantially added value to the company and increased its revenue.

The sellers can also create their inventory in the amazon centers and wait for dispatch. The company takes the responsibility to offer customer services, logistic services, and assess commodity returns. Whenever the customer orders an item, they also create an inventory in the company. The company will then take the duty of shipping the item to the client’s location. The company’s marketplace has benefited from the company’s logistic services that guarantee the safety of their items, timely delivery of their products, and the products being delivered are also of good quality.

For instance, the amazon center in Beijing has been given the mandate to ship commodities overseas by the united states government. The company invested a lot in the infrastructure needed to enable this overseas shipping. The capabilities of the company’s value chain have made the company very competitive. They have given it an upper hand in the retail industry, with many consumers preferring to use it with the comprehensive services it offers.

The organizational structure changed to suit all of its business operations (Tritt, 2019, 1). The value chain also has the production unit and another department, such as the procurement unit and the operations unit. The company has invested in various infrastructure that helps in company operations (Flanagan, 2018, 1). the company has also maximized its technology and automated most of its functions via the eCommerce platforms (Wu, 2018, 327).

Amazon Operations

Amazon managed to become the most innovative company and segmented its company operations (Rivet, 2017, 1). The company organized its operations into three major divisions: in North America, the international marketplace, and the Amazon web services, to streamline its value chain. In North America, the company set up various websites such as www.amazon.com.mx. And the www.amazon.com, that offer its services in this region. This region’s sales department was estimated to be about 30% in the year 2017 (Amazon, 2021, 1). This case is a significant improvement from the previous years, indicating that the company’s supply chain is continually increasing. The successful logistic department suggests an increase in the profitability of the company. Another website in this region is www.amazon.ca that has also boosted the company’s revenue each year.

In the International division, the company uses this platform to target all their consumers that are overseas. www.amazon.cn and the www.amazon.com.au that specifically order retail services for clients that are based outside North America. The other website, such as www.amazon.com.br, also make their sales internationally. The company estimated its sales via these websites to approximately 20% in 2017 (Amazon, 2021, 1). The company continually increases its revenue each year, indicating that the company’s customer base is also growing at a fast rate. In 2018, the company reported an increase in sales to 23%, which is a significant improvement from previous years. The company’s profitability has managed to increase despite the changes in the currency and economic times. For example, the exchange rate varies from country to country in the international market, which has been a challenge for the company. However, the company has maneuver around and still satisfy the customer’s in the international market. The foreign exchange influenced the company’s sales by about 138 million United States dollars in 2017, and approximately 1.3 united states billion dollars in 2018 (Amazon, 2021, 1). The changes in currency rates for the international market also make ordering and shipping of the commodities complex. The tax rates are also determined by the region the commodity is being shipped to, making the price range from region to region.

The third division is Amazon Web Services specializing in the sales of databases, storage, and other computing services needed globally. For instance, if an individual wants to start up a business, Amazon can supply these services. This division has been beneficial for individual enterprises, academic institutions, and government boards that may require databases or storage units. This segment of the company managed to bring in a lot of sales and garner the company many profits. For instance, in 2017, the company managed to raise its sales to about 43% that improved in the subsequent year to 47% (Amazon, 2021, 1). This division has become very popular, and the company has increased its profitability through this service.

The segment has resources such as cloud storage and networking services for companies such as Pinterest, Airbnb, and Dropbox. The company has used this platform to build businesses such as Tata Motors and Major League Baseball by establishing these companies’ applications. The client companies have been able to have their applications personalized to avoid crowdsourcing, and their clients have an easier time accessing the websites for these companies.

The company resorted to innovating a system that will bring a solution to the challenges of having many parties in the supply chain (Arnett, 2018, 13). This situation is often unreliable and creates tremendous losses. The change has made the company have a competitive advantage over other retail companies (Rikap, 2020, 1). The three divisions were a very innovative approach that has made the company’s logistic department very efficient and making the company’s operations run smoothly. This creative approach has added value to the company by solving the company’s challenges in the logistics department. The computing and storage services have also made the company’s operations complex and comprehensive to suit a wide variety of its clients’ needs and demands.

Generally, the global mogul uses four main strategies to ensure they reap maximum profit while serving their customers and the community at large. This strategic logistics encompasses the four service areas which are: Amazon outbound logistics integrates the following: Availability of physical stores, although the business is based on an online platform, there still exists physical stores that meet the needs of customers in the vicinity. This approach has enabled the business to gain an extra profit from the physical stores. Secondly is the fulfillment centers where the company does stock, dispatch, and shipment of products using robotics and reduces overall costs. Thirdly are digital deliveries that ensure all dispatches meet the designated locations and in the right conditions. Lastly is co-sourced and outsourced provision that meets the global demand of the company and its expectations.

References

Al-Marzooqi, M.B. and Nobanee, H., 2020. Financial Analysis of Amazon. Available at SSRN 3647442.

Amazon, 2021. Housing fund to benefit moderate- to low-income families and individuals in three communities Amazon calls home: Washington State’s Puget Sound region; Arlington, Virginia; and Nashville, Tennessee. https://www.aboutamazon.com/news/community/amazon-launches-2-billion-housing-equity-fund-to-preserve-and-create-over-20-000-affordable-homes. Accessed January 2021.

Arnett, J., Goldfinch, B. and Chinta, R., 2018. Multi-dimensional nature of innovation at Amazon. International Journal of Business Innovation and Research, 15(1), pp.1-13.

Flanagan, D.J., Lepisto, D.A. and Ofstein, L.F., 2018. Coopetition among nascent craft breweries: a value chain analysis. Journal of Small Business and Enterprise Development.

Harracá, M. and Coriat, B., 2017. Business models and organizational forms: searching the edge of innovation in Google and Amazon (Doctoral dissertation, Tesis de maestría, París XIII, Francia).

Rikap, C., 2020. Amazon: A story of accumulation through intellectual rentiership and predation. Competition & Change, p.1024529420932418.

Rivet, D.J., 2017. Amazon’s Superior Innovation: A Study of Amazon’s corporate structure, CEO, and reasons behind why it has become the most innovative company in today’s market.

Tritt, L.F. and Teschner, R.S., 2019. Amazon Delivers Diversity: Geographical & Social Influences on Corporate Embeddedness. Berkeley Bus. LJ, 16, p.1.

Wu, X. and Gereffi, G., 2018. Amazon and Alibaba: Internet governance, business models, and internationalization strategies. International business in the information and digital age, 13, pp.327-356.